Question

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&. You purchased a share of stock for $20. One year later you received $1 as a dividend and sold the share for $29. What was your holding-period return? A, 45% B.50% C.5% D, 40% Е.none of the above 9. The risk premium for common stocks A cannot be zero, for investors would be unwilling to invest in common stocks B. must always be positive, in theory С.is negative, as common stocks are risky. D. A and B E. A and C 10. An investment provides a 0.78% return monthly, its effective annual rate is A. 936%. B. 9.63%. C.10.02% D. 9.77%. Е.none of the above. 11. Which of the following statements regarding risk-averse investors is true? A. They only care about the rate of return B. They accept investments that are fair games C. They only accept risky investments that offer risk premiums over the risk-free rate. D. They are willing to accept lower returns and high risk E. A and B

Answer 1

8)

Holding period return:

= (Selling price + Dividend received ­– Purchase price) ÷ Purchase price

= ($29+$1-$20)/$20

= $10/$20

= 50%

Hence, correct option is B. 50%